67-floor tower falls victim to downturn in apartments

Auckland's softening apartment sector has hit plans for a $450 million skyscraper almost as tall as the Sky Tower, convincing the developer to turn instead to a new office block.

Dae Ju, a South Korean developer, was to build the 67-level Elliott Tower in time for the Rugby World Cup in 2011.

But Marcus Beveridge, Dae Ju's lawyer, cited the apartment downturn as the reason no work had started and said planning consent had just been won for a 26-level office Shortland St office block.

"Given the current weakness of the residential property sector, Dae Ju is now keen on undertaking the Shortland St commercial tower as soon as it can but a critical component will be securing the appropriate anchor tenants to make the project commercially viable."

Elliott Tower was to be built on the old Royal International Hotel land now used for carparking and a bungy jump on the large empty site alongside the Atrium shopping centre between Elliott St, Albert St and Victoria St West.

The tower was to have retail spaces, 54 levels of apartments, six levels of carparking, four levels of trees or sky gardens and three levels of shopping.

While that project has been hit, Dae Ju is vowing to soon begin work on the old Auckland Star site across town between Fort St and Shortland St.

But latest information from property consultants showed low demand for such a large new tower.

Zoltan Moricz, research and consulting director at CB Richard Ellis, said there was enough vacant office space for 7000 workers in the CBD. Auckland has about 100,000sq m of internal commercial floorspace vacant.

Dae Ju is also trying to sell its 5000sq m Greys Ave site, now used for outdoor carparking beside the Aotea Centre, ditching plans for a tall tower there and instead telling Colliers International to quit via private treaty

Mr Beveridge said the developer had secured non-notified resource consent for the planned 37,000sq m office tower at 20-28 Shortland St.

Permission to build was current for five years and had been vetted by Auckland's urban design panel. Construction could start on low-level parking and shops but it was better to lease a large portion of the block to an office tenant before building started, he said.

Elliott Tower got consent last year after neighbours SkyCity dropped opposition. Dae Ju has another seven years to build that skyscraper.

The developer has been planning the new Shortland St block for years but

Mr Beveridge said the time was right now to hunt for tenants because many city office business leases were

running out in 2012. He cited law firms, ANZ and ASB, saying the office block would be "ideal headquarters" for either bank.

Dae Ju used the same team of consultants on its planned new office block as on Elliott Tower: Dan Ashby and Tim Pope of builders Brookfield Multiplex, Gordon Moller of Moller Architects and Karl Cook of planners Barkers & Associates.